All organizations must deal with contract creation and management at some time. Contract preparation and administration are not the most appealing aspects of the sales process. However, for your firm to be successful, you must do and do well.
Your business must ensure that you keep above your contracts, evaluate them, and respond appropriately. To accomplish this successfully, the firm must employ contract management software to oversee the whole contract process. With that said, let’s go over the many phases a contract goes through, from planning to finalization.
- Planning phase
Before you can begin the process, you must first devise a strategy that best matches your company’s goals and resources. It is also necessary to develop contract management procedures that can be utilized throughout the organization to keep everything structured and tidy.
Your contract management plan is a customizable road map that includes processes for all sorts of corporate contracts, ranging from conventional employee contracts to paperwork from very unique and complicated agreements.
- The first stage in designing your plan is to identify and address your needs, which may include the responses to the following questions:
- What kinds of contracts do you have, and what are their volumes?
- Do you have any standard conventions that you frequently employ? What should be included in these?
- Who is in charge of each phase of contract management, and what resources do they require to accomplish their job?
- What have been the most prevalent problems in the past, or what concerns may emerge during routine contract management?
- What resources are required to put your contract strategy into action?
Understanding the remaining steps of contract management will assist you in informing your procedures.
- Implementation phase
After you’ve described your contract management procedures, you’ll need to put your strategy into action. Installing contract management software to assist you with contract-related duties, as well as transferring your contracts to a centralized storage place, are all part of this process. Ensuring everyone engaged knows your vision and contract management objectives and is acquainted with the tools they will use is crucial for your implementation.
- Pre-contractual stage
You may begin utilizing your contract management framework with new contracts now that you’ve built it. The most challenging issue at this contract management stage is creating a particular agreement that will offer what you need while lowering your risk.
Under normal circumstances, this process may be as easy as locating the appropriate type of contract, entering the necessary information, and possibly making a few changes. Contract circumstances that are unusual or complex may necessitate the production of an entirely new document.
- Handover Stage
It is typical – especially in large corporations – for the individuals participating in contracting to be different from those negotiating. As a result, ensuring a smooth transition is critical to ensuring that the contract is implemented as planned.
Instead of assuming that participants have all they need, it is beneficial to spend some time going through all of the contract’s specifics and clarifying the essential roles, duties, and actions.
- Contracting stage
If you manage your contracts effectively, the contract phase is when all of your contracts’ intents come to life. And a lot of the contract management work you’ve done so far is designed to do precisely that.
However, the contract clause does not govern itself; you must carefully consider all of the conditions of your agreement and take frequent steps to ensure that everything runs well. It is beneficial to have a strategy in place, with a clear understanding of the necessary procedures and performance indicators that will allow you to ensure everything is in order – or give an early warning system in the event of issues.
- Pre-renewal period
Nothing lasts forever, including your contracts. Your contracts might expire and come to an end naturally, after which you can choose to renew the agreement or terminate it.
There are many restrictions – and perhaps fines or default actions if you do nothing – that might impact the outcome, which is why it is critical to begin thinking about terminating your contract in an effective and timely manner. Now is the moment to go over your contract and determine whether or not to renew it or make any modifications.
- Post-contract phase
When a contract expires, some bookkeeping needs to be done to ensure everything is properly tied up. This involves checking if all termination criteria have been satisfied, issuing or paying closing fees, and documenting your contracts. It’s often a good idea to do a post-contract analysis, which may give important information and insights for new contracts.
Contracts serve a crucial role in every multi-party transaction, documenting information such as critical dates, pricing, vendor and buyer information, and signatures. Losing sight of your essential agreements and conditions can lead to missed deadlines, fines, overpayment of services, and late payments.